Fed holds interest rates for fourth time despite tariff turmoil

Fed holds interest rates for fourth time despite tariff turmoil 39 minutes ago Share Save Natalie Sherman BBC News Share Save Bloomberg/Getty People and businesses in the US have faced a whirlwind of policy change in recent months. But one thing has remained fixed: borrowing costs set by the US central bank. The Federal Reserve stuck with that strategy on Wednesday, leaving its key interest rate unchanged, even as officials' expectations for the economy worsened. The decision marked the fourth in a row without action, keeping the bank's influential lending rate hovering around 4.3%, where it has stood since December. That came despite forecasts from policymakers suggesting they expect slower growth, higher unemployment and faster inflation than they did just a few months ago. Typically, the Fed lowers borrowing costs if it believes the economy is struggling and raises them if prices start to rise too quickly. Inflation, the pace of price increases, remains above the Fed's 2% target, coming in at 2.4% in May. President Donald Trump has repeatedly called on the Fed to cut interest rates, arguing, in part, that the problem has faded. But Fed officials, who are empowered to make policy independent of the White House, have said they will make decisions based on the data. They have said they want more information about the extent to which tariffs and other policy changes will drive up prices, slow the US economy - or both - before lowering rates. In the rate announcement, the bank said that the economy overall remained "solid". But it released projections showing that policymakers, on average, are expecting growth to slow to 1.4% this year, down from the 1.7% they were forecasting in March. The forecasts call for inflation of roughly 3%, up from the 2.7% predicted in March and a rise in the unemployment rate to 4.5%. In remarks on Wednesday ahead of the Fed's decision, Trump repeated his criticism of Fed chair Jerome Powell, calling him "stupid" and speculating about the end of his term. The European Central Bank has cut interest rates eight times since last June. The Bank of England cut borrowing costs last month but is expected to hold rates steady this week. But Isaac Stell, investment manager at Wealth Club, said Trump may have "talked himself into a bit of a bind", as the Fed stays committed to its wait-and-see approach. "Central bankers tend to jealously guard their independence, which means that unless there's a really compelling reason to cut they might just stay sat on the fence," he said.